Debt boost in Prairies

Man., Sask. pick up pace

Up to three-quarters of Canadians say they are in debt, and the average debt load rose by 21 per cent to $15,920 over the last year, an RBC survey said.

Manitoba and Saskatchewan residents have been racking up debt at the third-fastest pace in the country over the past year, according to a new survey.

In its third annual debt-poll report released on Tuesday, the Royal Bank of Canada said the average personal debt load, excluding mortgages, of Manitoba/Saskatchewan residents jumped by 32 per cent to $15,361 from $11,503 in 2012.

The only regions to see bigger percentage increases were Alberta and British Columbia, at 63 per cent and 38 per cent respectively.

"That (32 per cent) is a large increase from past years," Kim Taylor, director of personal lending for RBC, said in an interview.

But the good news is despite the increase, Prairie (Manitoba/Saskatchewan) residents still had the second-smallest average personal debt load among the six regions covered in the report. Quebec had the lowest, at $10,458, while Alberta had the highest at $24,271.

Taylor said the increase here may be due in part to Prairie residents feeling more comfortable about making big-ticket purchases after two years of holding the line.

She noted the Prairies was one of the few regions in Canada where debt loads remained relatively stable in the previous two years as a growing number of people indicated they were delaying big-ticket purchases until they could get a better handle on their debt situation and develop a plan for better managing their debt.

Having done that, they may have felt comfortable in going ahead with some of those purchases in 2013, she added.

The executive director of Community Financial Counselling Services, a United Way-funded, non-profit agency, offered up another theory for this year's jump in debt loads.

"I'm wondering if some Manitobans decided to make big-ticket purchases before the PST (provincial sales tax) increase took effect in July," John Silver said. "I don't know if that happened... but that could be one correlation."

Silver said the spike in debt loads may explain why CFCS saw a 20 per cent increase in the number of clients seeking counselling services between April 1 and Sept. 30 of this year.

He said most people seek help when their debt load becomes too big for them to handle. The agency reviews their situation and outlines their options.

In some cases, they're in hot water because of poor money-management practices. But more often it's because of a dramatic change in their income because of illness, the loss of a job, a marriage breakup, or a death in the family.

In some cases, declaring personal bankruptcy is the best option, he said. In other cases, the agency may be able to negotiate a debt-reduction deal with the client's creditors and come up with a debt-repayment plan that's agreeable to everyone. And sometimes all the client needs is advice on how to better manage their money.

Silver said while it's disconcerting debt loads are rising, it's also encouraging more consumers are seeking help.

Nationally, the RBC survey found as many as three-quarters of Canadians said they are in debt, and the average personal debt load jumped by 21 per cent, or $2,779, to $15,920.

Taylor said other Canadians also may have increased their personal debt -- which includes credit cards, loans and personal lines of credit -- after putting off vacations or big-ticket items in recent years.

But she attributed the unusually big spike in Alberta debt loads to severe flooding last summer, noting many Albertans were still waiting for insurance payments. Or they didn't have insurance and had to take on debt to cover damages to their properties, she added.

Top tips from RBC on taming your debt

Here are a few tips for getting more financially fit:

Get to know your debt -- credit cards, loans, lines of credit -- and how much you owe. Online calculators such as the Debt Reduction Plan are available to get a better picture of your exact debt figure.

Speak with an account manager at the financial institution you deal with. He or she can help provide unique solutions for you to work on your financial fitness.

Examine all your options and see what makes the most sense for you to manage you debt. Also ask yourself which option you're most comfortable with, and what's the best way for you to pay off your debt. A consolidation calculator can help you determine what's best for you.

Make a plan to reduce your debt and stick to it. Like any fitness plan, you need to stick to it to see results.

History

Updated on Wednesday, October 30, 2013 at 6:55 AM CDT: Replaces photo

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